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IA Help: What diagrams can I use?


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Since Imports are a component of AD [AD=C+G+I+(X-M)], you can show, using an AD/LRAS diagram, how AD is expected to fall in the near future leading to a continuation of trade deficit and possibly a decrease in Real GDP. This diagram with go hand in hand with the issue of decreased remittances from workers abroad thus lowering domestic consumption C, also decreasing AD and Real GDP. The inflation caused appears to be cost-push in nature, so you could draw another with LRAS shifting up or even the effects on SRAS.

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